As a seasoned crypto investor who’s weathered more market storms than I can count, I’ve learned to approach new trends with both excitement and caution. The NFT market has certainly caught my attention, but the recent reports of instability have given me pause.
Over the last few years, the market for unique digital assets known as Non-Fungible Tokens (NFTs) has experienced remarkable expansion, only to be followed by sharp declines. While there was much early excitement surrounding NFTs and substantial financial commitment, they are currently facing considerable instability.
Based on information from nftevening.com, an astounding 96% of Non-Fungible Tokens (NFTs) are labeled as “inactive” or “dead” due to three key reasons: they have no trading activity, they’ve made very few sales over a seven-day period, and there’s no recent Twitter activity associated with them.
NFT Market Decline
After thoroughly reviewing approximately 5,000 different NFT collections and gathering around 5 million transactions from NFTScan, nftevening discovered that a significant number, about 43%, of current NFT owners are experiencing losses at the moment. Additionally, the typical lifespan of an NFT is surprisingly short, just 1.14 years – nearly double the average duration of traditional cryptocurrency projects.
In the short existence of NFTs, we see a volatile market full of rapid fluctuations in value and the temporary appeal of digital items that struggle to maintain lasting value over time.
nftevening stated,
It’s evident from the data we have: the NFT market, once hailed as the future of digital ownership and investment, appears to be facing substantial challenges. The high number of unprofitable holders, the vast gap between successful and struggling collections, and the brief lifespan of most NFTs imply that this market might not be the financial goldmine many anticipated.
As an analyst diving deeper into individual NFT collections, I noticed a substantial gap in profitability among them. The data from the platform indicates that the Azuki collection stands out as the most lucrative, with holders realizing returns over 2.3 times their initial investment. This success can primarily be attributed to three key factors: a robust community backing, a unique artistic style that resonates, and strategic marketing strategies effectively implemented.
Conversely, the Pudgy Penguins collection underscores potential dangers within the market as its holders have suffered a substantial 97% loss, marking it as the least rewarding collection to date.
Oligopoly in 2024
Initially, OpenSea dominated the NFT market during its peak. However, as time passed, the market transformed into a situation where two major players, OpenSea and Blur, held significant control. By 2024, this duopoly expanded into an oligopoly, with a rise in competition and variety among different marketplaces, suggesting a more diverse landscape.
Based on a recent study by CoinGecko, there’s been an increase in the number of NFT marketplaces that account for more than 10% of the annual market share. From only two major players in previous years, we now have four this year. Notably, Blur has solidified its position as the top dog in 2023, holding a staggering 62.4% of the market share in February and outranking OpenSea as the leading force in the NFT market for most of the year.
Towards the end of 2023, OKX experienced a sudden surge in popularity, propelled by the excitement surrounding Ordinals. This surge led to a significant increase in OKX’s NFT trading volume. In October, the volume stood at $8.35 million, but by November it had skyrocketed to $311.36 million. The momentum continued into December, reaching an impressive $684.65 million.
In December 2023, Tensor outperformed its main rival, Magic Eden, for the first time. This achievement came as a result of Tensor’s substantial growth, marked by an increase in its market share from a mere 0.1% to a robust 12.1%. This surge was accompanied by a dramatic rise in monthly NFT trading volume, which soared from $1.36 million to a staggering $215.57 million.
Conversely, OpenSea, initially leading the pack with a monthly NFT trading volume of approximately $438.08 million (representing 41.0% market share), experienced a steady decrease and finished the year at around $171.10 million in volume (accounting for 9.6% of the market share).
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2024-09-07 21:35